Ethiopia is poised to receive an additional $468 million from the International Monetary Fund (IMF) after reaching a staff-level agreement on the fifth review of its $3.4 billion Extended Credit Facility (ECF) programme.
The latest disbursement, which remains subject to approval by the IMF Executive Board, would raise total funding released under the four-year programme to approximately $2.65 billion.
The agreement followed discussions between an IMF team led by Alvaro Piris and Ethiopian authorities in Addis Ababa between May 6 and May 20, with further consultations continuing virtually.
In a statement issued on June 3, the IMF said Ethiopia had continued to record progress under its Homegrown Economic Reform Agenda, achieving positive macroeconomic outcomes despite disruptions linked to the ongoing conflict in the Middle East.
According to the Fund, key economic indicators, including output growth, exports, foreign exchange reserves, and government revenues, continued to improve through early 2026, while inflation showed signs of moderation.
The IMF noted that the Ethiopian government has maintained momentum in implementing reforms aimed at strengthening macroeconomic stability, promoting private sector growth, and improving economic competitiveness.
However, the Fund warned that risks to the country’s economic outlook have increased due to heightened global uncertainty and commodity price volatility associated with the Middle East conflict.
It stated that while the impact on economic growth, inflation, and external balances is expected to remain manageable if current disruptions prove temporary, policymakers must remain vigilant in managing rising import costs and fluctuating global market conditions.
The IMF advised Ethiopia to maintain a tight monetary policy stance to keep inflation under control while continuing efforts to improve the efficiency and transparency of the foreign exchange market.
The Fund also stressed the importance of strengthening domestic revenue mobilisation and ensuring prudent public spending to safeguard fiscal sustainability amid emerging spending pressures.
Progress on Debt Restructuring
The IMF further disclosed that Ethiopia is making progress in negotiations aimed at restructuring its external debt.
According to the Fund, discussions with official creditors are advancing as expected, while negotiations with bondholders are ongoing as part of efforts to secure a comprehensive debt restructuring agreement.
Reform Agenda Continues
Since Prime Minister Abiy Ahmed assumed office in 2018, Ethiopia has pursued a series of economic reforms designed to attract foreign investment, liberalise key sectors, and encourage private sector-led growth.
As part of these reforms, the country adopted an interest rate-based monetary policy framework in July 2024, aligning its financial system more closely with international standards and creating opportunities for increased participation by foreign financial institutions.
The proposed IMF disbursement is expected to provide additional support for Ethiopia’s fiscal needs, strengthen foreign exchange reserves, and help sustain ongoing economic reforms aimed at achieving long-term growth and stability.
